• Precedents

On 2012, the Government approved a package of measures according the prevention of money laundry and the OCDE resolutions, in order to ease the tax residents in Spain to afloat the goods located out of the country.  They established what themselves called a “tax amnesty”, so any citizen who voluntarily declared the goods abroad had no sanction.

The issue appeared when the Government created as well an informative return to be filled annually, declaring investments, real estate or bank accounts that, considering each block, arise the value at the end of the year of 50.000 EUR. Along with this new obligation, they established a very severe sanction regime, where the prescription was deleted, the minimum sanctions were very severe for an informative form, taking into consideration that the same sanction would apply to an individual who submitted the return one day after the deadline and to an individual who never submitted it.

The sanction regime was discussed and finally, after several years in Courts, the Court of Justice of the European Union, in its judgment of 27 January 2022, has declared that Spain has failed to comply with its obligations under the principle of free movement of capital.

• What does the Court of Justice of the EU has pronounced?

The Court emphasizes that the legislation in question could be justified, despite the existence of mechanisms for the exchange of information between Member States, since the information available to them in relation to the assets held abroad by their tax residents is, on the whole, less than that available to them in relation to assets located in their territory. However, the Court's examination reveals that the Spanish legislation goes beyond what is necessary to achieve these objectives, and this in three respects:

First, the Court considers that the rules adopted by the Spanish legislature, in addition to producing an effect of imprescriptibility, also allow the Tax Administration to challenge a statute of limitations already consummated in favor of the taxpayer, which violates the fundamental requirement of legal certainty.

Secondly, as regards the fine of 150% of the tax calculated on the amounts corresponding to the value of the assets or rights held abroad - qualifying it as an unjustified capital gain - the Court considers that the very high rate of this fine confers on it an extremely repressive nature, and that its accumulation with the fixed amount fines additionally provided for can lead, in many cases, to the total amount of the amounts owed by the taxpayer exceeding 100% of the value of his assets or rights abroad.

Thirdly, the Court understands that the penalty regime applicable, in case of imperfect or untimely compliance with the reporting obligation regarding assets and rights located abroad, is not proportionate to the penalties provided for similar offenses in a purely domestic context. The amount of these fines is 5,000€ for each omitted, incomplete, inaccurate or false data or set of data, with a minimum of 10,000€, and 100€ for each data or set of data declared out of time or not declared by electronic, computer or telematic means when there was an obligation to do so, with a minimum of 1,500€, adding at this point also the argument of the accumulation to the penalty of 150% on the differential quota in the personal tax.

• How the Spanish government will adapt the UE pronounce to the own law?

Pending of the final approve and publication, the main changes will affect the CIT and PIT law, among of other modifications in the General Tax Law. The most relevant aspects will be:

• The elimination of the presumption that the non-declared assets were illegal
• The elimination of the specific sanction regime, the regular sanction regime will apply
• The elimination of the imprescriptibility of the unjustified capital gains